ecommerce business strategy tips

January is the time of the year most of us are working on our New Year’s resolutions. There’s something cathartic and natural about using the first of the year to make new decisions. That’s the difference between ecommerce business plan that succeeds and those that flounder: the amount of time the seller puts into analyzing their successes and failures to plan for the future.

The internet is full of ecommerce “horror stories” that can basically be boiled down to the seller expecting the business to run itself. This leads to sloppy mistakes, many of them costly. If you review the previous year and use data to drive your future decisions, you’ll have a business running efficiently and profitably.


Nothing Good Happens by Accident

Imagine two guys of the same age, same weight, and the same background. One goes to the doctor for a checkup at least twice a year. He counts calories, monitors his cholesterol intake, and goes to the gym three times a week.

The other guy has no general plan. He doesn’t eat horribly by relative standards, but he doesn’t monitor calories, cholesterol, or any other health factor. He doesn’t live a sedentary lifestyle, but he also doesn’t have gym days or a workout routine.

Which of these men would you guess are the healthiest? Probably the guy with the plan.

With no other information, we can reasonably assume that the presence of a plan will yield better results than having no plan at all.

Learning to avoid major pitfalls in your ecommerce business as they occur is commendable, but it is by no means a replacement for thorough review, advanced planning, and meticulous execution.


The Three-Step Ecommerce Resolution

#1 Thorough Review

This is likely the part you came here looking for. While it’s only the first step in the process, it’s one of the most important.

To be ready to review your successes (and failures) from the previous year, you’re going to want to go ahead and gather up some key data from your ecommerce reporting tool.

  • Total sales
  • Conversion rate
  • Customer retention and acquisition
  • Average order price
  • Purchase order history
  • Shipping costs
  • Inventory
  • Cost of goods sold

The goal here will be to go deep into the numbers to identify and exploit trends within the data. We’ll talk more in the next section about which metrics are most important for an ecommerce business to have to review and plan.


#2 Advanced Planning

Once we’ve got the data and identified trends, we’ll move into advanced planning. It’s not enough to just know your sportswear company sells more youth football jerseys in August than any other month. You need a plan in place to take advantage of that knowledge.

Successful ecommerce businesses can plan by using the SMART method. It’s a popular acronym across industries and fields, and for good reason. It’s normally used for goal-setting, but by following the SMART method, you can also create plans that are reasonable and effective. Here’s how SMART plays out.

S – Specific. Your plan needs to include specific dates, channels, and methods.

M – Measurable. Your plan should include results that are quantifiable, not vague.

A – Attainable. We’d all like to get our products featured on Dr. Phil and make $1 million in sales the next day, but that’s not realistic. Pick your plans wisely.

R – Relevant. Keep your plan relevant to your space and overall business strategy.

T – Timely. Stretch your plans for the next month, quarter, or even year. Attach everything to time constraints.

former general electric CEO Jack Welch quote

#3 Meticulous Execution

It’s that last bit, the “drive to completion,” that we’ll focus on when it comes to meticulous execution. Once you’ve got your SMART plan informed by the previous year’s data, you can set off implementing your plan.

In the next section, we’ll begin our dive into your previous year.


Key Performance Indicators for an Ecommerce Business

Below, you’ll find a collection of your four biggest KPIs you should pull for the previous year. You’ll also find the related KPIs for those figures and how you should grow them to feed into your broader goals. You can gather this in a number of ways: Google Analytics, an ecommerce reporting software, insights tools available on each channel, or another third-party tool.

  • Sales – The total number of sales that you’ve had over the year. You can separate this by quarter and by month to get seasonal results.
    • Traffic – The number of visitors you have to your store. You can increase your traffic by creating more attractive content for your site and building a stronger online presence.
    • Conversion Rate – Your conversion rate is your traffic divided by the number of people who ultimately purchase. You can raise your conversions at multiple levels of the buying process.
    • Pricing – Are you pricing strategically, or are you basing your prices on hunches? An adjustment in prices can affect both sales and conversions. Popular pricing strategies including psychological pricing and consumer-centric pricing.
    • Sales by SKU – Which of your products are most successful? Which ones sell the slowest? Should you find a way to sell these slow-moving items, or eliminate them? Monitoring your sales by SKU will help you make these decisions.
    • Sales by Channel – Figuring out which of your sales channels are most profitable will help you strategically plan for the new year. If there’s a channel that’s not working out, it could be time to cut and run and expand to a new marketplace.
  • Average Order Value – This is the amount customers typically spend when they come to your store. It’s a different avenue to raising your profits, as it’s more focused on getting customers to spend more, rather than getting more customers.
    • Product Affinity – Product affinity tells you which products are typically purchased together. You can raise average order value by using product affinity data to create kits and bundles that are attractive to buyers.
    • Product Diversity – Product diversity is a measurement of how many different products you have available on your store. If you sell vintage guitars, could you also sell guitar strings, or maybe tuners? Use automated dropshipping to increase product diversity and raise average order value.
  • Customer Retention and Acquisition – There are two different sides to this metric. Retention is getting old customers to return and make new purchases. Acquisition is attracting new customers. Retention is more valuable, but acquisition is more voluminous.
    • Email Marketing – Are you capturing as many emails as possible? Do you know how to segment those emails once you have them? How often are your emails opened, and how often do the readers click on your links? Knowing the best practices for email marketing will help you get your customers to return to buy more. Review which of your email marketing campaigns were most successful and which were duds.
    • Social Media Marketing – Social media is great for brand awareness, but don’t forget to use it as marketing tool. Ads on Facebook, Twitter, and Instagram are great ways to draw clicks to your site because you’re able to directly target your buyer personas.
    • Brand Awareness – A great way to find new customers is to build strong brand awareness. Check your Moz rank for a measure of your brand awareness. Make your store a recognized name by writing guest blogs, participating in conversions on social media, or creating helpful content.
    • PPC– PPC, or pay-per-click advertising, is a great way to put native sponsored content in front of a large number of people and gain new buyers. See which PPC keywords produced the most conversions last year and focus your money there.
  • Fulfillment Process – The backend of your ecommerce business can be just as impactful to your profits as your frontend. Reviewing your fulfillment process from the previous year can help reduce waste and save money.
    • Returns – Returns can be costly. Not only do you lose the sale, but you also have to spend time processing it and risk having an upset customer leave toxic reviews. Make sure your returns policy is as simple as possible going into the next year.
    • Shipping Errors – Each shipping error is like throwing money away. How many did you have in the previous year? If it’s too many, you may want to consider implementing correction strategies, such as packing verification.
    • Oversells – An oversell occurs when a customer purchases an item that you don’t currently have in stock. It makes both you and the marketplace look bad, which is why Amazon is known to suspend oversellers with little warning. Overselling is the #1 reason Amazon sellers get suspended. Avoid oversells by implementing inventory management software.
    • Stockouts – An unexpected stockout on a popular item can be catastrophic. Every second the item is sold out, you’re missing out on sales. To reduce your stockouts, maintain accurate counts of your on-hand inventory and use purchase order management software to alert you to low inventory before a stockout occurs.


Data Visualization and Microsoft Excel

You’ve got all your data, but what do you do with it now?

Our entire goal with reviewing the previous year is to use data to make informed decisions about your business in the next year. It’s going to be difficult to do that if all you have is a huge list of numbers in front of you. All the data in the world won’t make a difference in your business if you can’t find a way to contextualize it.

That’s where data visualization comes in. Data visualization of using graphics to explain trends and narratives within sets of data. It allows stakeholders to make predictions based on recurring habits within a data set.

For example, look at the table of data below.

data visualization step 1

This is an example of raw data. It gives us all the information we need, but it doesn’t put the information in context. We can’t immediately see the relationship between the numbers presented in the data.

For contrast, check out this line graph made with the same data.

data visualization line graph example

Now we can see trends in the data immediately. Even without knowing the specific numbers, we can note spikes, dips, and general trends throughout the year. The data visualization has told us more at a glance than the raw numbers did.

A number of software programs exist meant to take your CSV and Excel files and convert them into beautiful charts, graphs, and other visualizations. Programs like these have several benefits:

  • Fast
  • Easy to use and learn
  • Many options for customization
  • Less chance of human error
  • Native sharing and publishing tools

But if you’re strongly opposed to spending the money, or you just prefer being hands on with your data visualization, you can always use Microsoft Excel. Excel tools aren’t the easiest thing in the world to learn, but they offer a great alternative to paid data visualization.

How to Create a Graph in Excel

In the next section, we’re going to show you some key visualization methods you can use to make the trends in your data more apparent, making it easier for you to make decisions based on the data from the previous year.

Step #1 – Open and Format Your Data in Excel

You can open CSV and Excel files directly with the Excel program. If you’ve got ecommerce reporting software, this will be the easiest step of all.

If not, you’re going to have to enter the data manually. This shouldn’t be too complicated, but it can be time consuming. Since you won’t be automating the process with software, be sure to double check your data table for typos. You don’t want to end up making decisions for the next year based on inaccurate data.

Another good tip is to add notes in your data that explain any spikes and further put the numbers in context.

format data in excel

Step #2 – Create Your Graph

Highlight the data you’d like to use for your graph. Don’t highlight any cells you’re using for labeling.

To create your graph, go to the top bar of Excel. Click the “Insert” tab. Toward the middle of the screen, you’ll see graphics displaying all your options for charts. Excel’s “Recommended Charts” is a great tool here. It quickly brings up the simplest and most common graphs. For this example, we’ll be making a line graph.

Click “Okay” and you’ll see the bare bones version of your graph.

create a graphic from data

Step #3 – Style Your Graph

Our graph is technically done, but it’s a little plain right now. You can spruce it up with Excel’s graph styling tools.

To do this, click on the graph. The top bar will now display design options. Choose whichever design and color scheme are most visually appealing to you. Click on “Chart Title” to name your graph. If you click on the plus sign directly to the right of the graph, you can add and remove additional elements including gridlines, a trendline, a data table, and more.

make you graph visual appealing

Those are your data visualization basics. Now that you know the narratives behind the numbers you’ve pulled, our next section will teach you how to make decisions based on this data.



Data Driven Decision Making

carly fiorina quote

Now that you’ve got all your data in front of you, it’s time to make sure you’ve got the right kind of mindset to capitalize on it. To do this, you’ve got to make sure you employ data-driven decision making.


End “Hunch Culture” in Your Business

What’s your process like when you’re figuring out a new product to sell? Imagine if you were selling clarinets online. One day, an idea hits you to sell saxophones as well. Your rationale is that both instruments are woodwinds, have similar fingering charts, and last month you had a customer inquiry asking how easy it was to learn clarinet if you already played the saxophone.

That’s a pretty good hunch. The problem? It’s still just a hunch. Great ideas are no replacement for great data. Your review of the previous year should drive your decisions for the forthcoming year. The hypothetical seller here could’ve used customer surveys to check if there was any significant saxophone interest from his or her customer base. They could have also used Google’s keyword planner tools to see if the saxophone space was too crowded for a new entrant.

This is the best time of the year to set a standard for data-driven decision making in your business. You’ve got all your data and now it’s time to use it. Here’s how you can get started.


Step #1 – Define Your Goal

The first thing you want to do is define your goal. The change itself is not the goal. The goal should be a tangible result of the change. What would be the point of adding saxophones to a chiefly clarinet-centered ecommerce business? Is it to expand to a new market and increase sales? Is it to increase the expertise and reach associated with the brand name? Is it to upsell previous customers by offering them an entirely new product? Remember to use the SMART method to help you set your goals.


Step #2 – Gather All Relevant Data

The process of pulling the data you need to make decisions is sometimes the hardest part. It’s why so many ecommerce sellers instead rely on hunches, guesses, and luck for their success. Since we’ve already pulled multiple important reports on our business, we are ahead of the curve on this step.

Focus on only relevant data. Your sales by SKU won’t help you determine whether to add a new product. Your conversion rate on your ecommerce website won’t help you determine whether to change warehouses. Keeping the data relevant will help you tune out distractions and focus on the specific decision at hand.


Step #3 – Gather Additional Research

Not all the data you need will be available to you from your own store. Some will require you to do market research, keyword research, additional customer surveys, competitor analysis, or other forms of outside research.

Don’t be afraid to go overboard. As long as it’s all relevant, there’s no such thing as too much data. When you go to the doctor, you’d want them to do every test they could before they started treating you, correct? Diagnosing your business needs should be done with the same level of examination.


Step #4 – Assess the Risks and Rewards

Calculate how much it would cost you to implement the change. Compare the number to the goal you created in step one. If both calculations are realistic and data-based, you should have an accurate picture as to the risk you’re taking with the change. The financial benefits of success should be significantly more than the financial risks of failure.


Step #5 – Execute, Edit, or End

Now that you’ve got your data and you know the risks, it’s time to decide what to do. If everything looks good, don’t hesitate to execute your plan.

Don’t make the mistake of believing this is a simple yes or no answer. Maybe the risk of expanding to a new marketplace was too significant for you to fully commit to. You could try testing the waters by listing one or two products on the channel. There’s no harm in planning an edit to your plan and carrying it out on a smaller or altered scale.

But if the numbers just aren’t there, don’t force it. No matter how exciting your original idea was, if you legitimately cannot find data that supports it being a success, it isn’t worth the financial risk to chase the idea down just because it seemed like a good idea at first.

Being a data-driven business means sometimes the data isn’t on your side. Trust your data and use it to guide you to a more efficient, more profitable business.


Initiatives of the Future

I’m a huge fan of sci-fi movies. One reason is that I’m a nerd, but I also really love seeing little glimpses into the future. A lot of people have asked me why I chose to work with ecommerce sellers despite my passion for technologies of the future. My answer is that ecommerce is one of the most exciting industries where we see technology rapidly altering the landscape.

The explosion of ecommerce itself is a credit to advanced technology. It’s never been easier to start an online retail business. For instance, anyone can buy a design on Fiverr for six bucks, upload it to Printful for printing and dropshipping, spend $29 on a Shopify subscription, and within a few hours you’ve got a fully operational, hands-off ecommerce business.

Where does technology stand the capacity to take us next? What are some initiatives every ecommerce business owner can explore in the next year? Below are three ideas worth exploring.

Video Marketing

kanye west ecommerce quote

As always, Kanye West is right. Product videos in ecommerce are statistically proven to increase conversion rates. Kissmetrics reports that users who view product videos are 144% more likely to purchase than users who do not. You no longer have to hire a professional video company to shoot your product videos. We’ve all got cameras and publishing platforms on our smartphones. Videos that typically do well in ecommerce are product tutorials, unboxings, and related lifestyle content. You can publish these videos on YouTube, Instagram, or even Snapchat.

unboxing videos

Source: GeekPlug

Expand to New Marketplaces

There have never been more options for ecommerce sellers. Amazon is drawing more customers than ever. They’ve even cut in on Google’s numbers, as over 50% of online shoppers now start their search on Amazon instead of Google. But looking outside of Amazon, the explosive growth of ecommerce has created a huge demand for online products. Mobile ecommerce is being expanded by social media platforms offering social commerce extensions for online sellers. More traditional marketplaces open to third-party sellers include Walmart and Bonanza. The more ways you can get your products in front of potential customers, the better. As the year goes on, keep an eye on new marketplaces and sales channels entering the space and evaluate their potential to add to your sales.

Explore the Internet of Things (IoT)

Have you heard about iBeacons? This digital technology allows devices to broadcast and receive signals in the physical world and react accordingly. The example below shows how this works. The Bluetooth signal to the left represents some kind of dedicated hardware, such as a vendor’s booth at a street festival. The dedicated hardware broadcasts a signal that can be picked up by mobile devices nearby, prompting the device to react in some way, such as opening an ecommerce product page for a wider selection of what the vendor is selling.

ibeacon technology


This connection of real-world space and digital space is called the Internet of Things. Big box stores are already beginning to explore the potential of this technology, offering interactive displays that alert customers to their existence through a notification on the store’s mobile app. The applications for a smaller ecommerce seller could allow you to expand into meatspace to find more customers. You could collaborate with a local brick and mortar store to offer online fulfillment of certain products, alerting customers to the option when they pass by the iBeacon. The full implications of this technology are still being explored, but keep up to date on this. You don’t want to be left behind on this one.



Before you can truly run a successful online store, you must first understand what ecommerce is. It’s more than just buying and selling online. Learning the basics of ecommerce can help you prepare for the future and implement the strategies above.

Now that you’ve read this guide, we hope you’ve got the tools and strategies down to better assess your business and progress into the future. The importance of knowing what data to pull and using it to inform your decisions will make your business more efficient and more methodical.

If you need help automating ecommerce backend operation, a 15-day free trial of ecomdash inventory management software can help you increase your sales by 23% quarter over quarter. We integrate with all your favorite marketplaces and sales channels to make running your business easier than ever.

Soon, you’ll be a data pro, a strategic mastermind, and the owner of an evolving business. Happy selling!

Launch an Online Store From Your Retail Store
Launching an Online Store from your Retail Store

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